The agony and the equity: misfiring in the stock market investment game

Ho-ho-hold-on! ’Tis not the season to buy stocks – and when a stockbroker gives that advice, it’s like a department store shooing away would-be customers from its Christmas sales.

As a stock market gambler, I have volumes of respect for Chris Tidd of Odlum Brown and avidly read his The Investment Advisory. So I’m impressed by his advice in the November edition of his newsletter under the lapels-grabbing headline: “It’s Time to Back Off the Stock Market.”

Tidd also makes a bold disclaimer – they must be a free-thinking bunch down at Odlum Brown: “My recommendation is that portfolios be more defensively positioned with significant cash or equivalent positions.

“Others, including our own Odlum Brown research department, would have a different opinion.”

Tidd doesn’t urge all capitalism to close down and take time to think the whole darned thing over. And he isn’t suggesting that shareholders cash out and invest their money under their mattresses. His article, dated November 5, concludes: “In light of my current opinion, I will not be making any stock or stock fund recommendations in this edition of The Investment Advisory. Bonds, bond funds and preferreds remain on the buy list, however.”

Whew. Guess I should dump my 12,000 shares of Anglo-Bomarc Mines, bought 25-odd years ago at prices up to $1-plus and currently soaring around $0.07. Shoulda, woulda, coulda placed a bet on one of Tidd’s recommended funds, PIMCO Monthly Income, which manages a mere $1.92 trillion worldwide and has a three-year return of 25.5%.

(Declaration of conflict of interest: None. Tidd isn’t my stockbroker. National Bank Financial’s Dwight Mann, who is, doubtless is relieved that I rarely contact him, such is my bland faith that it’ll all turn out right in the end. If not, I won’t be around then anyway.)

Tidd’s take should be read in full. But when someone of his experience, having analysed the risks – he cites the U.S. fiscal cliff, Europe, China, Iran, Syria, global debt and GDP slowdown worldwide (hey, there’s always the bright spot of Luxembourg) – perceives “the probability of a very disappointing year from now to late 2013,” maybe investors should slump back and take notice.

Or not.

You may have noticed that stock market handicappers have widely varying predictions, and select memories – 239% of them accurately predicted the big downturn of 2008. Since Tidd squinted at his crystal ball in early November, the stock market, week before last, had its biggest gain in 11 months.

But one week’s index lift is a blink of a short-seller’s eyelash, proving nothing, except that snapshots and rear-view mirrors are big in the investment toolbox.

Dipping randomly into my clippings, I note that in July Postmedia writer Ray Turchansky listed three widows-and-orphans stocks with relatively safe high dividends: TransAlta. Check. TransCanada Pipelines. Check. Enbridge. Check. Yep, I have all three. So should I sleep soundly? Not when the damned cat wakes me up for a three o’clock snack. Anyway, it’s stock losses that linger and madden. There’s a reason Penn West Petroleum was hotly recommended to me a few years ago (when it was $44; last statement, under $13). There always is. It’s just that I didn’t understand the reason, don’t remember it and don’t give a friar’s fib what it is. Nor can I figure out how a distillery stock can drop and stay dropped, like my Corby’s shares.

The most ominous statistic is that average incomes in North America, adjusted for inflation, have been essentially static for 30-odd years. Good for the rich, the rest in the ditch. That’s the deep-down bad news. •